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Raising the Public Sector Bar Through Private Sector Best Practices

Washington Suburban Sanitary Commission (WSSC), one of the nation’s largest and oldest public utilities, turned to best-in-class procurement practices from the private sector to deliver big savings to its bottom line.

By Jesus (Rudy) Gonzalez and Robert A. Rudzki ·
December 1, 2015

Who hasn’t heard the story about the federal government’s acquisition of $5,000 toilets and $600 hammers? Then, there’s Astronaut John Glenn’s famous quip about the Apollo Spacecraft having been provided by the lowest bidder? Over the years, public sector procurement has been characterized as wasteful, inflexible, bureaucratic, and slow—and with some just cause. Public procurement employees are often seen as inflexible, unresponsive, and uncaring, a by-product of their tenure or membership in a collective bargaining organization.

These stereotypes are founded on a few aspects of public sector procurement that differ from private sector procurement. One is the fact that public procurement is tightly confined by government policies, regulations, and state and/or federal laws that are not only difficult to change and update, but which also have the added feature of sending those who violate them to jail. These laws also require potential suppliers to navigate an endless numbers of proverbial hoops while rewarding the successful low bidders with tons of paperwork and other contract compliance requirements.

As a result, public procurement is seen as a low bid competitive environment, with high barriers to entry, dominated by well-entrenched and politically connected mega-companies that provide the government over-priced products and services. Entrepreneurship, innovation, and continuous improvement are not expected and many times are simply not understood by public entity employees. The modus operandi is “if it works, don’t change it” or “that’s the way we’ve always done it.” Negotiations are rare and supplier partnerships (and other private industry best practices) are often discouraged as not applicable, or more times than we would like to admit, as against regulations or illegal. The most familiar, and often cited, performance metric for procurement personnel is the number of years until they qualify for full retirement.

Who hasn’t heard the story about the federal government’s acquisition of $5,000 toilets and $600 hammers? Then, there’s Astronaut John Glenn’s famous quip about the Apollo Spacecraft having been provided by the lowest bidder? Over the years, public sector procurement has been characterized as wasteful, inflexible, bureaucratic, and slow—and with some just cause. Public procurement employees are often seen as inflexible, unresponsive, and uncaring, a by-product of their tenure or membership in a collective bargaining organization.

These stereotypes are founded on a few aspects of public sector procurement that differ from private sector procurement. One is the fact that public procurement is tightly confined by government policies, regulations, and state and/or federal laws that are not only difficult to change and update, but which also have the added feature of sending those who violate them to jail. These laws also require potential suppliers to navigate an endless numbers of proverbial hoops while rewarding the successful low bidders with tons of paperwork and other contract compliance requirements.

As a result, public procurement is seen as a low bid competitive environment, with high barriers to entry, dominated by well-entrenched and politically connected mega-companies that provide the government over-priced products and services. Entrepreneurship, innovation, and continuous improvement are not expected and many times are simply not understood by public entity employees. The modus operandi is “if it works, don’t change it” or “that’s the way we’ve always done it.” Negotiations are rare and supplier partnerships (and other private industry best practices) are often discouraged as not applicable, or more times than we would like to admit, as against regulations or illegal. The most familiar, and often cited, performance metric for procurement personnel is the number of years until they qualify for full retirement.

If history is our guide, economies take a turn every nine years. Yet time and again, a strong business cycle and fading memories convince us the good times will go on forever. Ten years after the great recession, we surveyed 100 manufacturing firms to find out if businesses are ready to fight through the next recession.

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